Nov 21st, 2008
Blue collar workers are the heart of America and (and a good portion of my readership) so I understand the fear that the big three automakers going under would mean massive unemployment. I also want American businesses to succeed, especially ones such as GM that employ thousands of workers. The problem is the big, bloated car giants spend money like there is no tomorrow. Giving them more money will simply give them more to waste. The proposed government bailout is not going to fix their problems and here are some reasons why:
1) It would not fix their flawed business models
GM workers earn and average of $70/hr in pay and benefits. That is simply too much. Thats more than (in the US) the average engineer, construction worker, teacher, project manager and blogger (ha!). Its not just assembly line workers either, the CEO Richard Wagoner makes about $24 million a year.
GM goes through $2 billion a month. A month! What good would 8 billion do them? Then there are the huge pension plans that no other industry could possibly afford to give.
2) Their cars aren’t very competitive
Guess which of the big three are on Kelley Blue Book’s top 10 brands? That’s right, none. They don’t hold their value and don’t stand up for the most part to similar foreign cars.
3) The idea that it would help American workers is a sham
The automakers are already outsourcing. See Ford’s 3 billion plant they are going to build in Mexico city. (The biggest foreign investment in Mexico’s history).
4) Government car bailouts have been tried and they DONT WORK
In England Leyland car company has having problems identical to our big 3. They owned over 1/3 of the entire market share. The government put in 16 billion to keep them afloat. So who here has heard of Leyland? Any takers? That’s because they went out of business anyway.